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Cynthia Charles

Wema Bank completes N50b bond listing

Wema Bank

Wema Bank Plc yesterday completed the final stage of its N50 billion Bond Issuance process on both the FMDQ and Nigeria Stock Exchanges.

A report released by the lender announced the dual listing of its series (1) seven-year Bond under the N50 billion Wema Funding SPV Plc Debt Issuance Programme. The bond tenure is seven years (due 2023) at 18.50 per cent fixed rate.

In a review note, the bank’s Managing Director, Segun Oloketuyi said: “Today (yesterday), Wema Bank completed the final stage of the Bond issuance process – the listing of Wema Bank’s series 1 (N6,295,000,000) seven-year Bond on both the FMDQ and NSE Exchanges. This is to ensure enough liquidity for the instrument and invariably increase the pool of potential investors”.

With regards to the proceeds from the Bond issuance, he explained that despite the current economic environment, there are indeed opportunities for growth, with the government, individuals and corporates now focused on the primary and/or value chain industries. As such, the proceeds would be used in growing the SME portfolio of the Bank’s business.

According to the subscription prospectus, the bonds are guaranteed and are direct, unsecured and unsubordinated obligation of the issuer and rank side by side without preference among themselves and equally with the claims of all holders of unsubordinated indebtedness as provided for in the Series 1 Trust Deed.

It said in case of the winding-up of the issuer, the claims of the trustee and the holders of unsubordinated notes against the issuer for payment of principal and interest in respect of the unsubordinated notes would be senior to the subordinated indebtedness of the issuer.

It added that the bonds are backed by an undertaking issued by Wema Bank in favour of the trustee for bondholders supporting all the obligations of the Issuer under the programme. Besides, the bonds are exempted from taxation in accordance with the Companies Income Tax (exemption of bonds and short term government securities) Order 2011, the Value Added Tax (exemption of proceeds of the disposal of government and corporate securities) Order 2011 and the Personal Income Tax (Amendment) Act 2011. As such, all payments made to bondholders shall be free without deductions.

Oloketuyi said the bank has witnessed a turnaround since the new management took over in June 2009, adding that before the coming of the new management, the lender had a negative capital position of N45 billion, with the lender virtually on its knees. He said the new management had grown the bank’s shareholders’ funds to N46 billion.

He said the lender previously had less than one per cent market share, and ran on obsolete technology, while Non Performing Loans stood at 89 per cent. But with the new management, the NPLs have dropped to 2.9 per cent while profitability has risen to new heights.

“So, we had to start to look at what to do with the bank and, therefore, developed a containment strategy focusing on how to stabilise the bank. The periods of 2010 to 2014 was largely used to give life back to the bank. So, the first major assignment we had to do were to secure the regulatory capital. We had to recapitalise the bank, which we did,” he said.

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Categories: BANKING
Cynthia Charles: She is a prolific writer and has special interest on writing about business and opportunities. She can be contacted via cynthiaadigwe@financialwatchngr.com
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